Rick Cole's Speech on Economic Sustainability at 2018 State of the City

February 6, 2018by Rick Cole

The below is an unedited transcript of City Manager Rick Cole's speech at the 2018 State of the City Economic Sustainability Summit.

Santa Monica is an economic success story. Out of 88 cities in LA County, we are nineteenth in population, but third highest in assessed property value. Our city government has over $1.5 billion in net assets, second highest per capita in the County. Our diverse economy and our strong balance sheet has earned Santa Monica the highest bond rating a public agency can achieve.

This provides our residents unmatched quality of services and up-to-date infrastructure. For our residents, that translates into more library story hours, faster medical response times, expanded play fields, less ocean pollution as well as cleaner and greener neighborhoods.

There is a popular myth that, until recently, Santa Monica was a sleepy little beach community.

But the historic record demonstrates a different story.

In 1880, Santa Monica had 417 residents. In the next ten years, the population tripled. In the next ten years, it doubled. In the next ten years, it doubled again. And in the next ten years it doubled again. And then in the next ten years it doubled yet again when our population reached nearly 40,000 by 1930.

It slowed during the Depression, but over the next two decades, the population again doubled.

The record clearly reminds us that Santa Monica was a boomtown from the start.

It was slated to be the main port of LA until San Pedro stole that prize. Douglas Aircraft employed over 44,000 workers in its Santa Monica factory. The arrival of the 10 Freeway brought even more development. In fact, by the Sixties, rather than a sleepy beach town, Downtown Santa Monica, Ocean Park and the Pico neighborhood were all seeing urban blight and decline, including obsolete factories, empty storefronts, rising crime and falling property values.

Few people realize that Santa Monica’s population reached a peak of over 88,000 back in 1970. In fact, our population didn’t surpass that level again until nearly 40 years later.

Instead of doubling every ten years, our population today is only about 10% higher than it was over half a century ago.

Like many declining American cities in the Sixties, Santa Monica pursued what was then called “urban renewal.” Historic neighborhoods, many of them occupied by poor and minority residents, were bulldozed. While those policies brought some short-term gains, they failed to spark a sustainable revival. Santa Monica in the Seventies was in economic decline.

What turned Santa Monica around? It was an inspired strategic vision. No single genius formulated the key ideas, but during the early Eighties, one of my predecessors as City Manager assembled the overall strategy in the short three years he held the job.

His successors and equally visionary City Councils led the implementation of that strategy, creating the prosperity that we enjoy today.

My predecessor’s vision was built around three primary elements.

First, the outmoded factories on the eastern edge of town were gradually replaced by first-class offices.

Second, the moribund pedestrian mall was redesigned as the Third Street Promenade, sparking the Downtown retail revival.

Third, Santa Monica was recast from a beach city that drew day visitors and motel guests to a genuine visitor destination, adding customers for the retail, dining, entertainment and cultural venues in our community.

Office business. Retail sales. Tourism. A relentless focus on these three elements has made Santa Monica into an economic powerhouse.

Yes, there were other important factors. The City’s investment in high-speed fiber helped launch tech businesses that have grown into Silicon Beach. Instead of subsidizing private development, Santa Monica invested redevelopment money into infrastructure. Rent control helped keep Santa Monica affordable for a local workforce. But the central basis for our economic success was a sustained focus on the three basic elements of office, retail and tourism.

Here’s the challenge . . .

When it comes to office business, not only is the market rapidly changing, but there simply is no appetite in the community for more office development given the headaches of Westside traffic.

When it comes to retail sales, not only has regional competition intensified, but retail itself is declining due to changing consumer choices.

And when it comes to tourism, not only do we face fierce regional competition and the rise of home sharing services, but our community doesn’t want to become a giant cruise ship – and discerning visitors won’t come to a place that is overrun with tourists.

We shouldn’t be surprised that the economic vision of the early Eighties has reached this point of diminishing returns.

Four decades is a remarkable run for any economic development strategy. It has worked so well and for so long that we have come to take it for granted.

But we can’t forget a basic law of economics: things that can’t go on forever, don’t.

So our Mayor and City Council have given City staff the job of partnering with our community to forge a new strategic vision.

It won’t be simply an update of the old one. We aren’t looking for three magic keys to our future. In fact, as the next two speakers will illuminate, we live in a time when things are too dynamic to base a long-term economic strategy on specific industries. The Economic Sustainability Plan we are embarking upon will not be focused as much on what we do as how we do it.

First, we must acknowledge that there is no such thing as a “Santa Monica economy.”

We are only 8.3 square miles out of the more than 4000 square miles in LA County alone. Surrounded by Los Angeles on three sides, our job is not to create an economic island, but to find our place in the larger economy of Southern California and the world.

It’s too soon to paint a picture of what the Economic Sustainability plan will contain, but today I want to sketch out for you how we plan to co-create this plan, drawing on the best ideas in our community and beyond.

The Santa Monica Chamber of Commerce and local businesses are obvious collaborators, but today marks just our first step in introducing this endeavor to the broader community.

We are reaching out to civic groups, labor, neighborhood associations, public and private schools, as well as colleges, think tanks and foundations.

We recognize that planning for the future competes for public attention with dealing with more urgent priorities.

We can’t duck immediate issues like homelessness and housing affordability. We can’t neglect resident concerns about crime, traffic and development.

But like the visionary leaders of four decades ago, we have the responsibility to look beyond the crises of today to forge a better tomorrow.

Let’s focus on two upcoming dates, 2019 and 2028.

2019 will mark exactly 250 years since a Spanish expedition discovered a nearby spring that they named “Santa Monica” because it reminded them of Saint Monica’s tears.

2028 is the year that LA will host the Olympics, including a major beach volleyball venue here in Santa Monica. Ten years may seem like a long time, but it will arrive before we know it.

So this year, we will enlist partners, do economic research and analysis and convene lively dialogue about our economic future. In 2019, together we will formulate our Economic Sustainability Plan, marking our 250th anniversary and looking ahead to where we want to be in 10 years when the Olympics comes to our town.

President Kennedy used to quote what he called an ancient Chinese curse: “May you live in interesting times.” Well, we live in interesting times. Many previous generations didn’t think much about the future – they were too busy building a boomtown. Some generations were short-sighted in their approach, taking short-cuts that ultimately fell short.

Will our generation to be visionary enough to create a brighter future?

Can we ensure that the Santa Monica we love is enhanced in the decades ahead? Practicing our core values and preserving our unique community identity, let’s roll up our sleeves and do the planning and hard work that lies ahead to ensure that we leave our city more equitable, more sustainable and more prosperous than we found it.